Posted on: Sunday, November 11, 2001

Commentary
Hawai'i must learn to be entrepreneur-friendly

By Jade T. Butay

Now that the Legislature has debated proposals on stimulating our economy in the aftermath of Sept. 11, I'd like to offer a long-term approach.

Now more than ever, Hawai'i needs entrepreneurs. It needs them for two reasons: to diversify our economy and to create wealth and new jobs.

In the next five years, tens of thousands of Hawai'i residents will be searching for jobs. Since traditional employers may find it difficult to sustain this level of employment in the future, it is entrepreneurs who will create these new jobs and opportunities.

Fortunately, today's knowledge-based economy is fertile ground for Hawai'i entrepreneurs. The nature of our new economy means a business doesn't always need to have physical or financial assets.

Entrepreneurship can have a lasting impact. The success stories of Steve Case and Michael Hartley should have enormous appeal in Hawai'i. There are an estimated 719 high-tech firms in Hawai'i, and some 2,000 jobs have already been funded by venture capitalists.

Hawai'i must, however, commit to creating the right climate to develop successful business builders, rather than impeding them with red tape. Government should follow the rule imposed on all new doctors. First do no harm. To do this, Hawai'i must focus on four areas:

• Create an environment for success. Entrepreneurs should find it easy to start a business. Today, most Hawai'i entrepreneurs would start with capital borrowed from family and friends. Compare this with a start-up in Silicon Valley where a venture capitalist would be brought in, a professional management team would drive the business, and partnerships would be explored early on to scale up the business.

• Ensure that entrepreneurs have access to the right skills. Most start-up businesses face two skill gaps: entrepreneurial (manage risks, build teams, get funding) and functional (product development know-how, marketing skills). In Silicon Valley, entrepreneurs either gain these skills by hiring managers or have access to nurturing support systems.

Hawai'i should ensure that its university curriculum is modified to address today's changing business landscape and to build "entrepreneurial centers" in institutes that will actively assist entrepreneurs.

• Ensure that entrepreneurs have access to "smart" capital.

For a long time, Hawai'i entrepreneurs have had little access to capital. This critical gap is a result of having only a few angel investors who support an idea in the early stages before venture capitalists become involved.

In San Francisco, I was impressed by the eagerness with which established entrepreneurs support start-ups. Clearly, Hawai'i would benefit from creating a strong network of entrepreneurs and managers that young up-and-comers could draw on for advice and support.

• Make performance a priority. In government, performance is still largely unknown, and rewards are determined by seniority, not merit.

In many ways, Hawai'i needs to question the bureaucratic baggage government workers have on our culture. Hawai'i's entrepreneurial spirit has been squeezed by our state policies and size of government for decades.

Much has been said about the challenges we face. Through focus and creativity, we can make our economy more competitive by liberating the entrepreneurial spirit of Hawai'i.

Jade T. Butay is an entrepreneur and was a management consultant in San Francisco before returning to Hawai'i.